Navigating Singapore’s 2011 talent market

If we are to draw a trend line of Singapore’s talent market, we can say that 2008 and 2009 were the bottom years, while 2010 is the first solid upward trend line in some time. Looking back, the critical issues were about managing costs, pay freezes, sustaining employee engagement and providing meaningful career opportunities for employees in a challenging economy. And in 2010, staff retention issues started to re-emerge, accompanied by a focus on preparing HR programmes for the recovery.

The next big question therefore is what to make of 2011 in the overall trend line? Will it have a steep curve or a sustainable positive trend for the local talent market? If there is no doubt on the upward trend, what critical human capital risk issues should companies take stock of?

How to compensate “local plus” employees?

Singapore’s attractiveness as a location of choice for foreign talent continues to soar. Companies are finding more opportunities to hire foreign talent who are either applying for jobs in Singapore from abroad or from within Singapore. Within this context we see growing challenges on how to properly compensate foreign employees who are not your traditional expatriates, but are also not exactly local employees. Given this absence of best practice to benchmark against, we have seen various approaches on either side of the spectrum and expect that this issue will continue to evolve going forward.

Benefits programmes taking more center stage

The crisis years of 2008 and 2009 provided a staging point where companies started to actively review their benefits programmes, either from a cost management perspective or a comprehensive review of their total reward packages. Employees also started to be more critical of the level of benefits they were receiving. In 2010, we saw a good number of clients starting to take action on this component with special focus on medical and insurance benefits as well as rationalising allowances and related items. Based on Towers Watson’s extensive work with key clients across various industries in the last 12 months, we think companies will continue to focus sharply on benefits in 2011.

Pay for performance

Our surveys also point to a growing number of companies improving their variable pay programmes and the mechanics linking pay with performance. The robust GDP growth in 2010 further brings this issue into focus as more employees are expecting higher bonuses vis-à-vis the impressive economy and business growth.

Salary budgeting a going concern

In the third quarter of 2010, Towers Watson’s compensation planning survey forecasted 4% as salary increase for 2011, across all industries. Quite recently, we have been getting indications that companies would probably go for increases higher than 4% to retain talent given the expectations of a tight labour market and high inflation.

Overall, the strong economy, tight labour market and evolving compensation and benefits landscape will provide interesting challenges for HR and business in 2011.

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